May I give you a scenario to considerLets say Jessup (Ex...

May I give you a scenario to consider
Lets say Jessup (Ex Director) didn’t have enough shares to sell to Cephalon so he approaches Mr Yap to sell part of his holding to make up the 19.8% Cephalon wanted or the deal with Jessop was off.
The share price at the time was languishing at around 0.80 to 0.90c so Mr Yap thinks a bird in the bush is better than nothing and sells some of his holdings.
Jessop gets what he wants and sells the majority of Startups holdings, I know that doesn’t seem right given he was a director charged with looking after the shareholders but Que Sera Sera.

What happened next is a little bit more interesting.

The shareholders did what the Directors should have done and got an independent valuation, so what did this prove I hear you ask.
It proved that Arana was being sold for far less than it was worth.
It also revealed the inadequacy of the Board as they supported the sale, The very people we entrusted the governance of the company too.

But that got a few people wondering “what if”, some thinking we are going to have egg on our faces if we depart with our shares under our purchase price, more to the point I believe it got Mr Yap thinking that he had sold out way to cheaply.

Now where are we at today and what may the future hold.
Lets say there is several groups of holders better informed than before

Group 1 contains the likes of Mr Yap that realises he was sold a dud by being convinced to sell into Jessops sale to Cephalon. It also contains a number of other Major shareholders that don’t accept the low offer as it’s below their original buy prices.

Group 2 The Hedge funds that own at present say 5%, they were in it for the Dividend but now realize that there is a lot more at stake.

Group 3 Those that have given there acceptances to say their broker hoping that they will get the best price by having their broker make the best decision, That decision has to be based on information that’s clearly now in the public domain.

Group 4 Those shareholders with significant holdings not tied to a broker that see the deal as fanciful and insulting and will not sell to Cephalon for $1.35

Group 5 Retail Investors that are also upset at the offer price.

Most of these groups are formed and have significant combined holdings, some are even buying on market at the moment
Most want the bid price to increase, some just don’t want to sell.

Its getting interesting and the longer we hold out the more likely the bid price will be increased as the above holdings equate to about 34% by my calculations.

If Cephalon only get the 50.1% That’s okay, we could all see a gradual increase in AAH’s share price.
But Cephalon wont be able to get hold of the money unless its through a capital return or dividend, They want the technology and the cash so 100% is the only sure way to achieve the end goal.

In the meantime the mere fact that Arana’s shareholders have actively disregarded the directors recommendation to sell their shares to Cephalon indicates a lack of faith in the board, make your own determination.

If the takeover does not proceed we will need a new board.

FOR MORE INFORMATION: I hear the Australian Newspaper is a good read on Tuesdays.